GBP/USD returns to 1.2100 ahead of UK CPI, May

The generalized selling pressure around the buck is prompting GBP/USD to cover Monday’s gap and advance to daily highs near 1.2130, just to ease some pips afterwards.

GBP/USD focus on May’s speech, CPI

The Sterling remains under pressure despite today’s correction higher, as inflation figures tracked by the CPI are due later for the month of December. Consensus expects consumer prices to have risen at an annualized 1.4% during the last month of 2016.

In addition, market participants will closely follow today’s speech by PM Theresa May later in the European morning. According to The Telegraph, May’s speech could unveil her plans for a ‘clean Brexit’, including at the same time an exit from the single market and the customs union.

In the meantime, spot has managed to fill yesterday’s gap lower to the 1.1980 region, although it still navigates the area of 3-month lows below the 1.2200 handle.

Adding to the fragile perspective around GBP, speculative net shorts have climbed to fresh 4-week highs during the week ended on January 10, as shown by the latest CFTC report.

GBP/USD levels to consider

As of writing the pair is gaining 0.48% at 1.2108 and a breakout of 1.2136 (high Jan.17) would aim for 1.2230 (20-day sma) and finally 1.2318 (high Jan.12). On the downside, the immediate support aligns at 1.1988 (low Jan.16) followed by 1.1450 (GBP ‘flash crash’ Oct.7).